It was only a matter of time…
Hackers have found a fundamental weakness of cryptocurrencies, and stole $20,000 worth of bitcoin gold and other digital currency.
It was almost too easy. When hackers take control of a majority 51 percent of a cryptocurrency’s network, they then have the ability to manipulate the blockchain, and reverse transactions that they have made – transactions that would otherwise be unchangeable. This allows them to spend the cryptocurrency twice.
The massive size of bitcoin and Ethereum networks makes a 51 percent attack virtually impossible, smaller digital currencies are at high risk.
The attacks take place on the blockchain of the cryptocurrency (its online ledger). Increased attacks lead to slower transaction times as exchanges scramble to identify attackers.
The latest attack, to the tune of 388,000 units of bitcoin gold, is worth $16.6 million at today’s prices.
Any blockchain is susceptible to attack by anyone who controls more hashing (computing) power than the honest miners – especially the smaller cryptocurrency blockchains.
But, it takes money to steal money. Cryptocurrencies like bitcoin gold, that have formed by splitting from established cryptocurrencies could be attacked by hackers who spend around $200,000 on hashing power per day; by contrast, anyone wanting to attack bitcoin cash (a much larger network) would need to spend around $2 million per day. It’s reasonable, then, to expect that future attacks will happen on the smaller cryptocurrencies, until someone can outhack the hackers.